You are required to determine the weighted average cost of capital of

Annaya Ltd$.,$ Using book value Weights. The following information is

available for your perusal :

The present book value capital strueture of the company is :

Debenture $($Rs$.100$ per debenture$)$

Rs$.7,00,000$

Preference shares : $($Rs$.100$ per share$)$

Rs$.3,00,000$

Equity shares $($Rs$.10$ each$)$

Rs$.10,00,000$

Anticipated external financing opportunities are :

$(1)$ Rs$.100$ per debenture redeemable at par after $8$ years, $13\%$ coupon

rate, $4\%$ flotation costs, sale price Rs$.100.$

$($ii$)$ Rs$.100$ preference shares redeemable at par, $5$ year maturity,

$14\%$ dividend rate, $5\%$ flotation costs, sale price Rs$.100.$

$($iii$)$ Equity shares : Rs$.2$ per share brokerage, sale price Rs$.22.$

Dividend expected on the equity share at the end of the year is

Rs$.2$ per share, the anticipated growth rate in dividend is $6\%$ and

the company has the practice of paying all its earning in the form of

dividends. The corporate tax rate is $35\%.$